Mumbai based realty stocks like Oberoi Realty, Godrej Properties, Macrotech, IB Real and Century Textiles have seen huge value buying yesterday, with these stocks rising by 4% to 12%. Reason for this is learnt to be sops being given to real estate sector by BMC & Maharashtra Govt. These are expected in the next couple of days.

1)    Reduction in Stamp Duty- On all Property transactions, stamp duty is likely to get reduced from 5% to 3%, a reduction of 2%. This is to facilitate Developers to clear their inventory in the coming festival season of Dussera and Diwali. This is expected to increase collection of the state government as well, as seen by the same Govt, last year as well.
2)    Rejig in FSI , via Fungible, TDR, Re-Development and Slum Rehabilitation- Floor Space Index (FSI) is likely to get increased, by making changes in basis of calculation of Fungible. Slum. Re-development and TDR, which will see higher entitlement of construction area being given to developers, at an average price of 25% price to Ready Reckoner rates of land. This will help under construction projects, of Developers seen in MMRDA Region, to have lower cost of land, thus raising their margins.

For example, Oberoi Realty may stand to gain with an increased margin of approx Rs. 1,000 crore, to their Ultra Modern Residential Project coming up at Prabhadevi, where 1 flat is costing Rs. 50 crore and above.

However, caution need to be exercised, and one should not rush to buy any realty stocks, already having risen. For example, Century Textiles, soon to launch its 35 lakh sq. Feet residential project in Worli (next to Prabhadevi) may see, as a big beneficiary, as also, to their Kalyan project on its own land, where risk reward is still seen in favour of buying the stock. 

Is it Diwali time seen ahead of Diwali, for Developers and Realty Stocks?

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